EPIC Recommends CFPB Strengthen Buy Now Pay Later (BNPL) Market Inquiry on Customer Acquisition and Data Practices

EPIC has submitted comments applauding the Bureau’s inquiry into the growing Buy Now Pay Later (BNPL) alternative credit market, but urging the Bureau to inquire further into customer acquisition and data governance practices. Rohit Chopra, Director of the CFPB, described BNPL as “the new version of the old layaway plan, but with modern, faster twists where the consumer gets the product immediately but gets the debt immediately too.” BNPL consumers are typically lower-income, younger, and experience greater income volatility. Successfully paying off BNPL credit does not strengthen the consumer’s credit because BNPL is an alternative form of credit, however failure to pay can negatively impact a consumer’s traditional credit rating. EPIC explained that “business models predicated on using alternative data present a substantial risk for predatory practices.” EPIC’s recommendations included that the CFPB request more granular detail about BNPL providers’: customer targeting and acquisition programs; acquisition and use of consumer data; data minimization, retention, and deletion practices; and policies regarding consumer and third-party access to data and to provider decisions. EPIC regularly files comments and amicus briefs on matters related to consumer privacy, big data, and algorithmic accountability, especially in the context of determinations of creditworthiness.